Lesson 1 Flashcards
a contract agreement in which a borrower receives a sum of money or something of value and repays the lender at a later date, generally with interest.
credit
may refer to the creditworthiness or credit history of an individual or a company.
Credit
To an accountant, it often refers to a _______________ that either decreases assets or increases liabilities and equity on a company’s balance sheet.
bookkeeping entry
an agreement to purchase a product or service with the express promise to pay for it later. This is known as _________.
buying on credit
buying on credit today is via the use of _______________.
credit cards.
The bank that issued the card repays the merchant in full and extends credit to the buyer, who may repay the bank over time while incurring interest charges in the meantime.
credit cards
The amount of money a consumer or business has available to borrow—or their creditworthiness—is also called ________.
credit
includes the strategies employed by businesses to accelerate sales of products or services through the extension of credit to potential customers or clients.
Credit control
Credit control might also be called _____________, depending on the scenario under review.
credit management
businesses prefer to extend credit to those with ______ credit and limit credit to those with _____ credit, or possibly even a history of delinquency.
“good”; “weak”
work to measure and report the credit of individuals as well as businesses (and especially for the bonds that they issue).
Credit rating agencies
is an entry that records a decrease in assets or an increase in liability as well as a decrease in expenses or an increase in revenue
Credit
The most popular form of credit is
bank credit or financial credit
includes car loans, mortgages, signature loans, and lines of credit.
bank credit or financial credit
There may be an exchange of goods and services in exchange for a _______________, which is another type of credit.
deferred payment
argues that all money (whether fiat or backed by something) is a form of credit.
credit theory of money
In the context of ___________________, a credit is an entry recording a sum that has been received.
personal banking or financial accounting
______________ appear on the right-hand side of a checking account register, and ___________ appear on the left.
credits (deposits); debits (money spent)
three levels of credit control
Restrictive; Moderate; liberal
is a low-risk strategy, limiting credit only to customers with a strong credit history,
restrictive policy
is a middle-of-the-road risk strategy that takes on more risk,
moderate policy
is a high-risk strategy where the company extends credit to most customers.
liberal credit control policy
refers to the market through which companies and governments issue debt to investors, such as investment-grade bonds, junk bonds, and short-term commercial paper.
Credit Market
are usually responsible for administering credit policies.
credit manager or credit committee
Which is the length of time a customer has to pay
Credit period
present purchasers an incentive to pay in cash more quickly
Cash discounts
Some businesses offer a percentage reduction of discount from the sales
price if the purchaser pays in cash before the end of the discount period.
Cash discounts
Measures the aggressiveness in attempting to collect slow or late
paying accounts.
Collection Policy
Includes the required financial strength a customer must possess to qualify for credit.
Credit Standards
True or False
Lower credit standards boost sales but also increase bad debts.
True
a barometer of creditworthiness.
FICO score
refers to the market through which companies and governments issue debt to investors
Credit market
Credit Market offers:
- investment-grade bonds
- junk bonds
- short-term commercial paper
debt market, the credit market also includes debt offerings, such as
- notes and securitized obligations,
- including collateralized debt obligations (CDOs),
- mortgage-backed securities, and. - credit default swaps (CDS).
is the largest issuer of debt, issuing Treasury bills, notes and bonds, which have durations to maturity of anywhere from one month to 30 years
Government
process of granting credit to yourc customers setting payment terms recovering payments ensuring customers comply with your company’s credit policy
Credit Management
